Tomorrow’s Skilled Workforce Requires Investing in Young Children Today: The Importance of Early Childhood Development

The case for investing in children from the start is compelling. But it is not always well understood by the public, nor is it a priority for policymakers. Another group that rarely prioritizes investment in young children is the business community. Yet all of these groups have a strong interest in ensuring the robust education, health, and well-being of young children. Businesses need not make such investments just because they are moral or the right thing to do, but because they are in fact critical to supplying a skilled workforce of the future—something very much in business’s self-interest.

The business community—local and multinational companies alike—is interested in a vibrant labor market that can supply the necessary skills for business growth and sustainability. But increasingly around the world, employers are complaining about the difficulty of finding the skills that they need in the marketplace. Employers do report gaps in academic and technical skills, but they also consistently cite deficiencies in skills like creative thinking and problem solving as well as communication, teamwork, adaptability and time management. In East Asia, the technologically innovative and export-oriented firms report the largest gaps. This is consistent with findings in the U.S., where increasing economic sophistication has led to less routine and manual tasks and a sharp increase in non-routine tasks that require employees with interactive and problem-solving skills.

Despite mounting evidence of skills gaps, and persistence in some labor markets of simultaneously high levels of unemployment and large numbers of job vacancies, school systems have been slow to respond. More and more children are going to school, but by some accounts, 250 million children of primary school age cannot read all or part of a sentence. And we have little information about their competencies in other domains. Countries often turn to technical and vocational education training (TVET) as the first response to fill skills gaps, in part frustrated by the long lead time required in addressing these needs through basic education systems.  Yet, this has not been an effective strategy for several reasons. First, TVET programs that are more often than not run by public institutions suffer from poor quality and low relevance. Second, they do not typically focus on the “soft” skills that many companies are looking for. Third, they are seen as second tier and only for those students who cannot make it in general schools. Finally, they are expensive and generally produce very low returns on investment.   

School systems clearly have a critical role to play in equipping students with the knowledge and the skills that will serve them well in their economic, social and life pursuits.  Schools need to do a better job of improving students’ learning outcomes, not just in academic fields but also in the areas of social (e.g. teamwork) and personal (e.g. perseverance) competencies that also interact with academic skills to produce better life and livelihoods outcomes for them.  They also need to do more to provide meaningful second chance opportunities for some youth, and incorporate into training programs internship opportunities as well as a focus on skills beyond vocational ones.

While we should rightfully expect a lot from education systems, there is also an important broader societal responsibility here. Children come to school with large variation in their readiness to learn, reflecting differences in their home environment and parental involvement.  In the U.S., by age 2, children with college educated parents know twice as many words as children whose parents are on welfare.  The reality is equally bad or worse in the developing countries (India, Peru, Ethiopia and Vietnam) that were part of the Young Lives Longitudinal Study, showing large gaps in language acquisition between five-year-olds from families in the highest versus lowest income quintiles.  Can we realistically expect school systems to be able to make up for these differences? And at what cost?

More and more, we are realizing the influence of early development on children’s readiness to learn and chances of success later in life. We know from the scientific literature that attention to the development of human capital needs to start when the brain is developing the fastest and is at its most malleable—that is, right at the beginning of life.  And we know from the economic literature that pay-off to these investments are high for individuals, economies, and societies, and much harder and more expensive to do as children get older and the plasticity of the brain declines. It turns out that much of this pay-off comes from the positive impact of a supportive, nurturing, and stimulating environment on the cultivation of “soft skills” in children that last into adulthood.  Strong evidence from Professor James Heckman’s work in the U.S. on this point is now being complemented by studies from the developing world, for example, Jamaica.

We now have then a clear picture of the evidence, need, and solutions for expanding early childhood development programs globally, especially for children from poor and disadvantaged communities. The evidence comes from neuroscience, psychology and economics. The need is clearest in the expressions of frustrations from the business community. And the programmatic solutions are mounting from both the developed and developing world.

There is clear scope for business to play a role in not just voicing their concerns but also in helping devise and deliver solutions.  The opportunities are ample. A group of interested corporate leaders will come together in New York on September 23 to deliberate on what contributions they can make to both invest themselves and compel others—businesses, philanthropic organizations, governments and donors alike—to invest more in ECD. Options include changing internal business policies (e.g. providing quality daycare for employees, facilitating breastfeeding in the workplace) and making ECD a priority for corporate social responsibility activities. They could also champion ECD in local and global policy discussions and support additional research. Finally, it may be possible to focus on providing or funding ECD programs in some countries, including through innovative financing schemes, such as social impact bonds.  When self-interest and social value coincide, great things can happen.